Business Model Canvas: WHO? WHAT? WHY?

Transcription

1 For NVBC Round 2.0, April 2015

2 The Magic Wand!

3 No magic wands

4 Agenda Business Model Canvas: WHO? WHAT? WHY? HOW? Business Model Generation via Canvas 1. Value Proposition + Customer Segments 3. Channels 4. Customer Relationships 5. Revenue Streams 6. Cost Structures 7. Key Resources 8. Key Partnerships 9. Key Activities 10. Weaknesses of the BMC Normally do this over 8 weeks: today, 2 hours

5 Problem = Business Plans Blah Blah Blah

6 Solution = one pagers

7 Problem = Assumptions betriebsblind

8 Solution = ask

9 BMC Genesis The business model ontology: A proposition in a design science approach. Alexander Osterwalder 2004 University of Lousanne 160 pages + bibliography

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11 Team = Osterwalder & Pigneur, et al. Self published in 2009, published by Wiley & Sons, 2010 New book: Value Proposition Design. Planned launch in Fall 2014

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15 Solution = scientific method Business Model Canvas hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis

16 Evidence National Science Foundation 3X funding success using BMC/LLP Intuit Greater commercial success (new products) BDC preferential Convertible Notes Start-up data is confounded Lean Canvas has no partner nor resources component and is not well received by non-software segments. Why are we doing this?

17 Traction: Wide adoption Used by companies from start-ups to Fortune 500s, business schools Half a Million Books + 26 Languages + over 5,000,000 Canvas users

18 VP & CS Business Model Canvas VP 1 (user) VP 2 (payer) CS 1 (user) CS 2 (payer) e.g. Game for kids

19 VP&CS: Product-Market Fit VCR

20 Value Proposition What is your customer s problem/pain? How does your solution solve their problem/pain? Why is it better than the current solution? Design Accessibility NEW! Status Custom Performance Usability Convenient Risk $PRICE$ $COST$

21 Value Proposition Greater the pain, greater the potential value GPS Accuracy

22 Value Proposition It is VALUE not PRICE $12,000,000 Free - $ $69.99 No value -> No customers Value -> customers Note: customer can include acquisition event.

23 Value Proposition: Timeless Example A sailing ship from San Diego to Honolulu currently takes 12 days which is too long for many travellers. Our new steam powered ship reduces travel time to 6 days. In addition, the ship requires less crew and fewer supplies. This trip on our ship only costs 10 * more than a sailing ship *1 week salary circa = = $108 CDN 10 = $1080 CDN

24 Value Proposition NOW: Create your value proposition: What is your customer s pain? What is your solution? How is it better than your customer s current solution?

25 25 Customer Segments Business Model Canvass 25

26 26 Customer Segments Defini:on Customer group, with a common denominator, for whom you serve and create value. Purpose of Customer Segmenta=on: Determines business viability Focuses Value Proposi=on Op:mizes resources / efficiencies Develops exper:se + rela:onships Builds compe::ve advantage Examples of Customer Segments: Business Revenue Consumer Profitability Geography Demographics Income Sector Life cycle Behaviour 26

27 27 Customer Segments Same Product. Looking for the right customer

28 CHANNELS YOU Competitor Customer Potential Partner

29 CHANNELS 1. AWARENESS YOU Competitor Customer Potential Partner Looks a fashion magazines Rarely watches TV Goes to Fine Dining Travels by air frequently Doesn t garden Etc.

30 2. Evaluate CHANNELS

31 CHANNELS 3. Purchase Customer

32 CHANNELS 4. Delivery

33 CHANNELS 5. After sales All sales final Return for credit Return for full refund 30 days free support Satisfaction surveys Money back before 30 days Free customer support Paid customer support Remote support On-site support Training Follow-up phone calls How-to videos Facebook group Free upgrades Paid upgrades Paid Add-on features Support groups Loyalty programs

34 CHANNELS What is yours? 1. Awareness program 2. Evaluation strategy 3. Purchase methods 4. Delivery methods 5. After sales support

35 Revenue Streams Types Asset sale Usage fee Subscription fees Lend/rent/lease fee License fee Brokerage fee Advertising Fixed pricing Dynamic pricing Example Sell a book, circuit board, music Minutes used on a phone Club membership, satellite radio Temporary use returnable Grant use of a patent or copyright middle-man, credit cards Sell space-time on a website, Feature, volume, location dependent Auction, Yield (airline seats), negotiated

36 Revenue Streams Your Revenue Stream model = advantage Subscription Broker Rental Broker Asset Sale

37 Revenue Streams How does your customer pay for their current solution? How much does your customer pay for their current solution? (do they have a limit?) How would your customer prefer to pay? (Club Penguin example) How much will they pay? How do you prove it?

38 Cost Structure 1. Better before Cheaper Systematically, exceptional companies differentiate on non-price factors Source: Globe & Mail, June 17 th, 2013, on Michael Raynor & Mumtaz Ahmed s new book The Three Rules. 3. Revenue before Cost Drive up returns on assets through higher relative revenue than by lower relative cost or lower relative assets. Superior profitability does not depend on cost.. 5. There are No Other Rules Above rules tell you where your best bet lies Credit to: Peter-Paul Van Hoeken

39 Cost-Driven Business Model Focus on minimizing costs wherever possible Creating and maintaining the leanest possible Cost Structure, using: Low price Value Propositions Maximum automation, and extensive outsourcing. Examples: No frills airlines, such as Southwest

40 Value-Driven Business Model Some companies are less concerned with the cost implications of a particular business model design, instead focus on Value Creation Premium Value Propositions and a high degree of personalized service usually characterize value-driven business models Examples: Luxury hotels

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42 How to EXAMPLE Step 1. Scientific method + Customer Discovery Hypothesis: Our customers require live support 24 hours/day, 7 days per week. Experiment: Live call customers to see if this is true. Determine to a level of confidence (e.g. p=0.01) Customer Discovery: What level of support would you like? What else would you like? Bronze, Silver, Gold levels of support

43 Keys Key Resources Key Partners Key Activities

44 Key Partnerships Partnerships

45 Key Partnerships Key Partnerships Co-founder Strategic Alliance Joint Venture Buyer-supplier Make a list of key partners: 1) NVBC Has 2) Might like to have 5 minutes

46 Key Resources Key Resources: required your business to succeed Physical: building, equipment, servers, etc. Intellectual: Customer databases, brand awareness, patents, trademarks, secrets, etc. Human: certifications, experience, connections Financial: LOC, cash, share-pool Create your list (5 minutes)

47 Key Activities Key Activities Production: Physical product, virtual, software, delivery. What MUST happen? Problem solving: e.g. new solutions to customer problems. Not exclusive to service companies. What 3-4 activities MUST NVBC do in next 90 days? 5 minutes

48 Weaknesses Analysis of the customer Analysis of the competition

49 Solutions Customer Empathy Maps Day in the life of (customer segment X) Decision map

50 Customer Empathy Empathy Video 1 Customer Empathy (Apple)

51 Customer Empathy

52 Competition Customer Discovery Interviews Old fashioned research Internet search Reports User groups

53 Customer Discovery Create a list of 10 people you believe are your users and/or paying customers and talk to them (face-to-face). You are seeking (a) insights, (b) new actions. Healthy Eating Interview Death by Powerpoint

54 Customer Discovery Example questions (DO NOT SELL): Is X a problem for you? How do you solve X now? What is your cost of the current solution? If someone provided new Value Proposition Y, would you use it? Who else should I talk to?

55 Customer Discovery Customer Discovery & Validation

56 Thank you! Peter Payne,

57 Appendix

58 How to EXAMPLE Step 2. Weighted result based on critical-to-success Simplified example: Confidence level: 1 10 (10 = very high confidence) Critical level: 1 10 (10 = very critical to success) Score: (1/Confidence)x(Critical) = proportional to success e.g. High confidence and highly critical: (1/10)x(10)= 1 High confidence and not critical: (1/10)x(1) = 0.1 Low confidence and highly critical: (1/1)x(10) = 10 Low confidence and not critical: (1/1)x(1) = 1 Higher numbers require action.

59 How to Project Portfolio Management Project Score (simplified examples): Project 1 Project 2 Project Project 4 Project 5 Project Determine which projects have the highest probability of best revenue